An offer to settle a legal dispute can be made at any time, including before or after a legal proceeding has been commenced.
Offers to settle serve two main functions:
1. First, they can result in the finalisation of a dispute without the need to start or continue a legal proceeding; and
2. Second, they can provide valuable costs protection if the offer is not accepted and a legal proceeding is commenced.
Multiple offers can be made at different points in time (for example, after the parties have filed evidence, or given discovery). When structuring an offer to settle, it is important to ensure that the offer provides for all loose ends to be tied up to ensure the dispute is fully and finally settled.
A legal regime exists to create costs implications for parties who reject offers of settlement unreasonably. Making an offer to settle (sometimes called a Calderbank Offer) is therefore a way of protecting yourself in relation to the legal costs that will, necessarily, be incurred in pursuing legal action.
When a legal proceeding goes to trial, one of the questions that always arises is what happens with respect to the legal costs the parties have incurred. While the general rule is that the losing party pays the winning party's legal costs, it is rarely (if never) the case that 100% of those costs are repayable by the loser to the winner. This is because a statutory "scale" exists, which moderates legal costs charged by lawyers. On average, a winning party might get an order that approximately 50-60% of its legal costs are repayable by the losing party. These are called "party-party costs".
However, a Calderbank Offer can displace this general rule. If, after a trial, the court considers a Calderbank Offer made at some point in the proceeding was reasonable, and contained an offer to settle the dispute on terms that were more favourable that what was ultimately achieved at trial, the court may order that the offeree pay some or all of the offeror's costs on an indemnity basis. These are called "indemnity costs".
How we can help:
- We represent and advise you in a manner which affords you the best costs protection in relation to your dispute;
- We prepare (or respond to) offers to settle disputes;
- Once a legal proceeding has commenced, we advise you on making or responding to offers to settle the dispute; and
- We draw up a binding and enforceable settlement arrangement, to protect and empower you in case the other party defaults on what he or she is required to do.
Please reach out to Aaron McDonald on 0401 919 456 or aaron@pragma.law for more information.
